Cirrus logic reports fiscal second quarter revenue of $540.6 million
Austin, texas--(business wire)--cirrus logic, inc. (nasdaq: crus) today posted on its website at investor.cirrus.com the quarterly shareholder letter that contains the complete financial results for the second quarter fiscal year 2023, which ended september 24, 2022, as well as the company’s current business outlook. “cirrus logic reported q2 revenue of $540.6 million, marking the fifth consecutive quarter in which we have set a revenue record for the corresponding fiscal period. results were well above the top end of our guidance, as we benefited from higher unit volumes and high-performance mixed-signal content gains in smartphones,” said john forsyth, cirrus logic president and chief executive officer. “in addition to these strong results, during the quarter we also made excellent progress in our audio product lines and in our strategy of expansion through adjacent high-performance mixed-signal applications. we furthered the development of our next-generation flagship smartphone audio components, continued to build momentum with our audio products in additional markets, and saw the continued growth in value of our camera controller solutions. with an extensive product portfolio and an outstanding roadmap, we believe we are positioned well to capitalize on opportunities that we believe will drive growth in the years to come.” reported financial results – second quarter fy23 revenue of $540.6 million; gaap and non-gaap gross margin of 50.2 percent; gaap operating expenses of $155.1 million and non-gaap operating expenses of $123.9 million; and gaap earnings per share of $1.52 and non-gaap earnings per share of $1.99. a reconciliation of gaap to non-gaap financial information is included in the tables accompanying this press release. business outlook – third quarter fy23 revenue is expected to range between $520 million and $580 million; gaap gross margin is forecasted to be between 49 percent and 51 percent; and combined gaap r&d and sg&a expenses are anticipated to range between $153 million and $159 million, including approximately $21 million in stock-based compensation expense, $9 million in amortization of acquired intangibles, and $3 million in acquisition-related costs. cirrus logic will host a live q&a session at 5 p.m. edt today to discuss its financial results and business outlook. participants may listen to the conference call on the investor relations website at investor.cirrus.com. a replay of the webcast can be accessed on the cirrus logic website approximately two hours following its completion, or by calling (647) 362-9199, or toll-free at (800) 770-2030 (access code: 95424). cirrus logic, inc. cirrus logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer applications. with headquarters in austin, texas, cirrus logic is recognized globally for its award-winning corporate culture. cirrus logic, cirrus and the cirrus logic logo are registered trademarks of cirrus logic, inc. all other company or product names noted herein may be trademarks of their respective holders. use of non-gaap financial information to supplement cirrus logic's financial statements presented on a gaap basis, the company has provided non-gaap financial information, including non-gaap net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, effective tax rate, free cash flow, and free cash flow margin. a reconciliation of the adjustments to gaap results is included in the tables below. non-gaap financial information is not meant as a substitute for gaap results but is included because management believes such information is useful to our investors for informational and comparative purposes. in addition, certain non-gaap financial information is used internally by management to evaluate and manage the company. the non-gaap financial information used by cirrus logic may differ from that used by other companies. these non-gaap measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with gaap. safe harbor statement except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including our statements about capitalizing on opportunities that we believe will drive growth in the years to come, and our estimates for the third quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. in some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. in addition, any statements that refer to our plans, expectations, strategies, or other characterizations of future events or circumstances are forward-looking statements. these forward-looking statements are based on our current expectations, estimates, and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially, and readers should not place undue reliance on such statements. these risks and uncertainties include, but are not limited to, the following: the effects of the global covid-19 outbreak and the measures taken to limit the spread of covid-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the covid-19 outbreak and the actions taken to mitigate the spread of covid-19; increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the u.s and overseas; the level and timing of orders and shipments during the third quarter of fiscal year 2023, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our form 10-k for the year ended march 26, 2022 and in our other filings with the securities and exchange commission, which are available at www.sec.gov. the foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise. summary financial data follows: consolidated condensed statement of operations (in thousands, except per share data; unaudited) three months ended six months ended sep. 24, jun. 25, sep. 25, sep. 24, sep. 25, 2022 2022 2021 2022 2021 q2'23 q1'23 q2'22 q2'23 q2'22 audio $ 337,811 $ 254,496 $ 300,775 $ 592,307 $ 518,130 high-performance mixed-signal 202,763 139,143 165,111 341,906 225,009 net sales 540,574 393,639 465,886 934,213 743,139 cost of sales 269,288 191,005 230,442 460,293 367,749 gross profit 271,286 202,634 235,444 473,920 375,390 gross margin 50.2 % 51.5 % 50.5 % 50.7 % 50.5 % research and development 115,471 109,716 102,116 225,187 187,812 selling, general and administrative 39,598 38,642 38,132 78,240 73,279 total operating expenses 155,069 148,358 140,248 303,427 261,091 income from operations 116,217 54,276 95,196 170,493 114,299 interest income 1,285 305 35 1,590 796 other income 295 506 1,859 801 1,617 income before income taxes 117,797 55,087 97,090 172,884 116,712 provision for income taxes 30,609 15,380 11,994 45,989 14,407 net income $ 87,188 $ 39,707 $ 85,096 $ 126,895 $ 102,305 basic earnings per share: $ 1.56 $ 0.71 $ 1.48 $ 2.27 $ 1.78 diluted earnings per share: $ 1.52 $ 0.69 $ 1.43 $ 2.20 $ 1.72 weighted average number of shares: basic 55,726 56,277 57,364 56,002 57,473 diluted 57,418 57,804 59,451 57,620 59,485 prepared in accordance with generally accepted accounting principles reconciliation between gaap and non-gaap financial information (in thousands, except per share data; unaudited) (not prepared in accordance with gaap) non-gaap financial information is not meant as a substitute for gaap results, but is included because management believes such information is useful to our investors for informational and comparative purposes. in addition, certain non-gaap financial information is used internally by management to evaluate and manage the company. as a note, the non-gaap financial information used by cirrus logic may differ from that used by other companies. these non-gaap measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with gaap. three months ended six months ended sep. 24, jun. 25, sep. 25, sep. 24, sep. 25, 2022 2022 2021 2022 2021 net income reconciliation q2'23 q1'23 q2'22 q2'23 q2'22 gaap net income $ 87,188 $ 39,707 $ 85,096 $ 126,895 $ 102,305 amortization of acquisition intangibles 7,787 7,835 7,054 15,622 10,052 stock-based compensation expense 20,483 18,138 16,551 38,621 31,535 acquisition-related costs 3,164 3,164 5,834 6,328 5,834 adjustment to income taxes (4,135 ) (4,300 ) (6,045 ) (8,435 ) (8,994 ) non-gaap net income $ 114,487 $ 64,544 $ 108,490 $ 179,031 $ 140,732 earnings per share reconciliation gaap diluted earnings per share $ 1.52 $ 0.69 $ 1.43 $ 2.20 $ 1.72 effect of amortization of acquisition intangibles 0.14 0.14 0.12 0.27 0.17 effect of stock-based compensation expense 0.35 0.31 0.28 0.67 0.53 effect of acquisition-related costs 0.05 0.05 0.09 0.11 0.09 effect of adjustment to income taxes (0.07 ) (0.07 ) (0.10 ) (0.14 ) (0.14 ) non-gaap diluted earnings per share $ 1.99 $ 1.12 $ 1.82 $ 3.11 $ 2.37 operating income reconciliation gaap operating income $ 116,217 $ 54,276 $ 95,196 $ 170,493 $ 114,299 gaap operating profit 21.5 % 13.8 % 20.4 % 18.2 % 15.4 % amortization of acquisition intangibles 7,787 7,835 7,054 15,622 10,052 stock-based compensation expense - cogs 312 277 272 589 518 stock-based compensation expense - r&d 14,228 12,592 10,496 26,820 20,108 stock-based compensation expense - sg&a 5,943 5,269 5,783 11,212 10,909 acquisition-related costs 3,164 3,164 5,834 6,328 5,834 non-gaap operating income $ 147,651 $ 83,413 $ 124,635 $ 231,064 $ 161,720 non-gaap operating profit 27.3 % 21.2 % 26.8 % 24.7 % 21.8 % operating expense reconciliation gaap operating expenses $ 155,069 $ 148,358 $ 140,248 $ 303,427 $ 261,091 amortization of acquisition intangibles (7,787 ) (7,835 ) (7,054 ) (15,622 ) (10,052 ) stock-based compensation expense - r&d (14,228 ) (12,592 ) (10,496 ) (26,820 ) (20,108 ) stock-based compensation expense - sg&a (5,943 ) (5,269 ) (5,783 ) (11,212 ) (10,909 ) acquisition-related costs (3,164 ) (3,164 ) (2,373 ) (6,328 ) (2,373 ) non-gaap operating expenses $ 123,947 $ 119,498 $ 114,542 $ 243,445 $ 217,649 gross margin/profit reconciliation gaap gross profit $ 271,286 $ 202,634 $ 235,444 $ 473,920 $ 375,390 gaap gross margin 50.2 % 51.5 % 50.5 % 50.7 % 50.5 % acquisition-related costs — — 3,461 — 3,461 stock-based compensation expense - cogs 312 277 272 589 518 non-gaap gross profit $ 271,598 $ 202,911 $ 239,177 $ 474,509 $ 379,369 non-gaap gross margin 50.2 % 51.5 % 51.3 % 50.8 % 51.0 % effective tax rate reconciliation gaap tax expense $ 30,609 $ 15,380 $ 11,994 $ 45,989 $ 14,407 gaap effective tax rate 26.0 % 27.9 % 12.4 % 26.6 % 12.3 % adjustments to income taxes 4,135 4,300 6,045 8,435 8,994 non-gaap tax expense $ 34,744 $ 19,680 $ 18,039 $ 54,424 $ 23,401 non-gaap effective tax rate 23.3 % 23.4 % 14.3 % 23.3 % 14.3 % tax impact to eps reconciliation gaap tax expense $ 0.53 $ 0.27 $ 0.20 $ 0.80 $ 0.24 adjustments to income taxes 0.07 0.07 0.10 0.14 0.14 non-gaap tax expense $ 0.60 $ 0.34 $ 0.30 $ 0.94 $ 0.38 consolidated condensed balance sheet (in thousands; unaudited) sep. 24, mar. 26, sep. 25, 2022 2022 2021 assets current assets cash and cash equivalents $ 355,043 $ 369,814 $ 386,741 marketable securities 23,869 10,601 8,152 accounts receivable, net 304,546 240,264 280,967 inventories 164,571 138,436 188,360 other current assets 108,538 80,900 84,836 total current assets 956,567 840,015 949,056 long-term marketable securities 49,013 63,749 67,726 right-of-use lease assets 162,859 171,003 129,298 property and equipment, net 158,722 157,077 159,480 intangibles, net 141,909 158,145 174,852 goodwill 435,936 435,791 437,783 deferred tax asset 13,094 11,068 10,073 long-term prepaid wafers 174,787 195,000 195,000 other assets 71,180 91,552 102,892 total assets $ 2,164,067 $ 2,123,400 $ 2,226,160 liabilities and stockholders' equity current liabilities accounts payable $ 118,000 $ 115,417 $ 386,699 accrued salaries and benefits 59,140 65,261 54,919 lease liability 13,583 14,680 14,359 acquisition-related liabilities 45,984 30,964 — other accrued liabilities 45,658 38,461 44,404 total current liabilities 282,365 264,783 500,381 non-current lease liability 152,294 163,162 122,815 non-current income taxes 65,255 73,383 79,727 long-term acquisition-related liabilities — 8,692 33,329 other long-term liabilities 9,539 13,563 21,818 total long-term liabilities 227,088 258,800 257,689 stockholders' equity: capital stock 1,618,177 1,578,427 1,533,557 accumulated earnings (deficit) 40,927 23,435 (65,672 ) accumulated other comprehensive income (loss) (4,490 ) (2,045 ) 205 total stockholders' equity 1,654,614 1,599,817 1,468,090 total liabilities and stockholders' equity $ 2,164,067 $ 2,123,400 $ 2,226,160 prepared in accordance with generally accepted accounting principles consolidated condensed statement of cash flows (in thousands; unaudited) three months ended sep. 24, sep. 25, 2022 2021 q2'23 q2'22 cash flows from operating activities: net income $ 87,188 $ 85,096 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 17,219 15,812 stock-based compensation expense 20,483 16,551 deferred income taxes 1,404 294 loss on retirement or write-off of long-lived assets 11 331 other non-cash charges 86 92 net change in operating assets and liabilities: accounts receivable, net (98,274 ) (137,707 ) inventories 9,799 12,037 prepaid wafers — (195,000 ) other assets (2,491 ) (94,911 ) accounts payable and other accrued liabilities 14,229 302,681 income taxes payable (16,829 ) (9,432 ) acquisition-related liabilities 3,164 33,329 net cash provided by operating activities 35,989 29,173 cash flows from investing activities: maturities and sales of available-for-sale marketable securities 1,961 308,478 purchases of available-for-sale marketable securities (850 ) (14,194 ) purchases of property, equipment and software (10,211 ) (3,893 ) investments in technology (36 ) (2,034 ) acquisition of business, net of cash obtained — (275,642 ) net cash used in investing activities (9,136 ) 12,715 cash flows from financing activities: debt issuance costs — (1,716 ) issuance of common stock, net of shares withheld for taxes 1,011 2,457 repurchase of stock to satisfy employee tax withholding obligations (2,156 ) (1,013 ) repurchase and retirement of common stock (50,000 ) (40,002 ) net cash used in financing activities (51,145 ) (40,274 ) net increase in cash and cash equivalents (24,292 ) 1,614 cash and cash equivalents at beginning of period 379,335 385,127 cash and cash equivalents at end of period $ 355,043 $ 386,741 prepared in accordance with generally accepted accounting principles reconciliation between gaap and non-gaap financial information (in thousands; unaudited) free cash flow, a non-gaap financial measure, is gaap cash flow from operations (or cash provided by (used in) operating activities) less capital expenditures. capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our gaap consolidated condensed statement of cash flows. free cash flow margin represents free cash flow divided by revenue. twelve months ended three months ended sep. 24, sep. 24, jun. 25, mar. 26, dec. 25, 2022 2022 2022 2022 2021 q2'23 q2'23 q1'23 q4'22 q3'22 net cash provided by (used in) operating activities (gaap) $ 232,730 $ 35,989 $ 74,365 $ 258,231 $ (135,855 ) capital expenditures (29,651 ) (10,247 ) (7,224 ) (8,456 ) (3,724 ) free cash flow (non-gaap) $ 203,079 $ 25,742 $ 67,141 $ 249,775 $ (139,579 ) cash flow from operations as a percentage of revenue (gaap) 12 % 7 % 19 % 53 % (25 ) % free cash flow margin (non-gaap) 10 % 5 % 17 % 51 % (25 ) %
